Tandem Company Manufactures Two Products (D and F) What Is the Allocation Rate Per Setup Using Activity-Based Costing

question 194

Multiple Choice

Tandem Company manufactures two products (D and F) . The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: $\begin{array}{cccc}\text { Product } & \text { Number of Setups} & \text { Machine Hours} & \text { Packing Orders }\\\hline \mathrm{D} & 10 & 500 & 75 \\\text { F } & 10 & 2,000 & 175 \\\text { Cost perpool } & \$ 11,000 & \$ 60,000 & \$ 18,750\end{array}$ What is the allocation rate per setup using activity-based costing?

• A)$ 550
• B)$1,100
• C)$11,000
• D)$2,200

---

Definitions:

Budgets

Estimates of income and expenditure for a set period of time, serving as a financial plan for individuals or organizations.

Managerial Value

The value or impact that effective managerial decisions have on the overall success and valuation of a company.

Planning Process

A systematic series of steps taken by organizations or individuals to achieve desired goals.

Road Map

A strategic plan that outlines the steps or milestones needed to achieve specific goals.